Men have dominated the financial market workforce for centuries as women tended to vital parenting and household needs. Over the years, the culture has evolved leading many to believe that men are in the Wall Street workforce because they are better at investing than female investors.
Fidelity conducted a study last year and found that only approximately nine percent of women felt they could outperform men when it comes to investing for their retirement. In this study, it was revealed after examining over 8 million investor accounts from Fidelity that the opposite is true.1
Women are more apt to saving and earning higher returns and typically earning forty basis points more than men. When saving, women saved an annual average of nine percent from their paychecks compared to men who saved less at a little more than eight and half percent. This isn't to say that women are better at handling money but is consistent with a report from the Wall Street Journal when posted in 2015 that reflected both sexes have their different strengths and views towards money. Men tend to take more risk while women are usually more conservative towards investing. "Women, for instance, are more likely than men to choose the target-date funds offered in employer-sponsored retirement accounts. Men tend to invest more in other options on the menu, including stock funds." 2 The data also reflected that men typically trade more often than women which is usually discouraged from long-term investing as one may miss bull market pops not to mention the fees included in trading which deteriorates a portfolio performance. Women usually traded less often and are more likely to seek professional advice compared to men which shouldn't be surprising but women also tend to fear more over losing their principal than men.
Men will typically end up with more saved in their retirement accounts compared to women because men tend to earn more money compared to women; therefore, men having extra cash to put away for retiring gives them the advantage over women. While this sensitive topic continues to be debatable across the media, the Department of Labor has confirmed this as a fact. "The gender earnings ratio (women's earnings as a percentage of men's) for full-time, year-round workers improved from 60.2 percent in 1980 to 79.6 percent in 2015. Progress has slowed in the 2000s. However, in 2015, women were sixty percent of workers paid at or below the federal minimum wage, and they were the majority of full-time workers who earned less than $400 per week. 3
As recently as 2015, the gap still existed by 27.3 percent, based on median weekly earnings of full-time wages and salaries.
With the salary question now removed, why is it that women still lack faith in their ability to invest?
A study by Merrill analyzed 11,500 investment personality assessments and discovered that women aren't comfortable with their knowledge about investing and the financial markets. This explains the 13 million participant study analyzed by Fidelity that discovered "42% of women used professionally managed accounts, compared with 36% of men-the other 64% of men were designated "do-it-yourselfers".2 This isn't to reflect that women aren't interested in learning about investing--quite the opposite. Fidelity stated "88 percent of women say more financial education would provide them with greater confidence in managing their money....learning more about 'how to invest my money' is their No. 1 choice." 1
Based on the studies and intriguing insight of both sexes presented over investing, it appears that as the marriage counselor would say, "You must work together and combine your strengths." Learning from each other's habits of money management, can benefit both sexes and eliminate in the process any overconfidence or lack thereof. In the meantime, men...maybe consider having your wife assist in the monthly budget and investing.
1 Who's the Better Investor: Men or Women? Fidelity. 18 May 2017. Retrieved from https://www.fidelity.com/about-fidelity/individual-investing/better-investor-men-or-women
2 Jasen, Georgette. Male Investors vs. Female Investors. Wall Street Journal. 3 May 2015. Retrieved from https://www.wsj.com/articles/male-investors-vs-female-investors-how-do-they-compare-1430709406
3 Women's Earnings and the Wage Gap. Women's Bureau. U.S. Department of Labor. Retrieved from https://www.dol.gov/wb/resources/Womens_Earnings_and_the_Wage_Gap_17.pdf
About Fidelity's Women and Money Survey
Results of this survey are based on an online omnibus conducted among a demographically representative U.S. sample of 2,995 adults comprising 1,496 men and 1,499 women 18 years of age and older. The survey was completed during the period December 1-11, 2016 by ORC International, an independent research firm. The results of this survey may not be representative of all adults meeting the same criteria as those surveyed for this study.
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